Legal protection in an LLC versus an Umbrella Insurance policy

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I've heard it said many times before that we should always hold our properties in an LLC. In fact I have done so in the past, with some cost, here in California. Some fairly prominent people in the industry suggest if you own multiple properties, you should own each one in an LLC nad have a master LLC own each of those, sometimes incorporated in a different state from where your properties exist, to take advantage of stronger legal protection. As the theory goes, if you wrap each property in two layers of LLC's in this way, it's very unlikely that your personal assets would be at risk due to a lawsuit relating to your investment properties.

However, I've heard a few people on BP prefer to hold properties personally, likely due to easier financing (FHA loan vs. commercial loan) and they cover their risk to their personal assets (due to a lawsuit) with an Umbrella insurance policy.

So, the question is, which one do you prefer, and why? LLC vs. Umbrella Policy